Leaf Resources Limited (ASX:LER)

Alex Baker
CEO
Market Cap (AUD): 6.75M
Sector: Materials
Last Trade (AUD): 0.019 +0 (+0%)
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1. About

Leaf Resources is focused on the commercialisation of a unique biomass pretreatment technology to be used in making sustainable products from plant biomass. Leaf Resources’ innovative GlycellTM process is a disruptive technology that can reshape the economics of using large scale biomass resources as a replacement for petroleum derived products.

2. Business model

 

The Company is in the process of commercialising its biomass pretreatment technology – the GlycellTM process.  Once commercialised, the Company will generate income and profits:

  1. from the licensing of intellectual property assets; and
  2. from Government grants and programs targeted at pursuing Australia’s investment in research and technology.[1]

3. Strategy

 

Key strategies include:

 

Commercialisation of the GlycellTM process on a global scale.

 

The Company’s goals for the year ending June 30th 2016 are to:

  • Engage with potential licensees for the sale of licenses to produce cellulosic sugars
  • Engage with potential partners, (hence limiting the Company’s capital requirements), for the building of the first plant for the production of cellulose from plant biomass to serve as a commercial  scale demonstration of the GlycellTM process

 

On the technical front,  the Company will focus on further enhancing the economic efficiency of the GlycellTM process by:

  • Finalising the glycerol recycling
  • Extending the range of biomass feed stocks which have been used in the process; and
  • Continue the evaluation of silica extraction [2]

 

4. Markets

 

The Company operates in the following industries:

 

Industry

Industry Revenue (2017)

Annual growth (12-17)

Biotechnology (Australia)

$7 billion

4.0%

[3]

 

5. Competition

 

Major Competitors include:

 

6. History

 

1999   

  • Listed on the ASX as Aquacarotene Limited.

 

2009   

  • Entered into a transaction with California based Aurora Biofuels Inc. for the transfer of the leases and licences on the ponds at Karratha held for the production of marine algae to them for UD$2,000,000 plus 2% royalty on gross revenue for 15 years

 

2010   

  • Merged with Farmacule Bioindustries Pty Ltd.
  • Changed the company’s name to Leaf Energy (ASX code LER).

 

2012   

  • Announced the entry of the company into pretreatment of biomass using Glycerol.

 

2014   

  • Announced that 2 provisional patents for the GlycellTM process had been lodged.
  • Enterered into a collaboration agreement with Zeachem Inc.[4] of Lakewood, Colorado and changed the Company’s name to Leaf Resources Limited to reflect its new focus on the commercialisation of Biomass pretreatment technology.

 

2015   

  • Announced that the provisional HybriTechTM patent has been lodged.

 

2016

  • Entered joint venture with Zeachem Inc to establish a Glycell based project in the USA.
  • Announced Australian patent lodged for new process to extract silica from plant biomass.
  • Entered into a joint venture with Claeris LLC, to develop up to five renewable chemical projects.
  • Leaf signs MOU with Malaysian Government Agencies.
  • Leaf Resources and Novozymes launch biomass-to-sugars collaboration.

 

2017

  • Entered Biodegradable packaging market leveraging Glycell strategy.
  • Signed an exclusive agency agreement with HB International.
  • Leaf Malaysia signed a term sheet for a Malaysian biorefinery site.
  • Leaf and Verdezyne to collaborate on developing empty fruit bunch biomass sugars for biobased chemicals.
  • Leaf signs LOI for provision of biomass.

7. Team

 

Board of directors

 

Doug Rathbone  – Chairman

Ken Richards – Managing Director

Alex Baker – Non-Executive Director

Matthew Morgan – Non-Executive Director

Bill Baum - Non-Executive Director

Tim Pritchard – Company Secretary[5]

 

Management team

 

Ken Richards – Managing Director

Jason Lowry– Chief Operating Officer

Tim Pritchard - Chief Financial Officer

Brian O'Neill – Senior Process Engineer

Dr Les Eyde – Head of Research & Development[6]

 


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8. Financials

 

2017

Revenue ($’000)

% Change

Profit/(Loss) (before tax) ($’000)

% Change

Gravel

Nil

0

(59)

(82.40%)

 

Research and Development

Nil

(100)

(1,349)

(50.42%)

Total

Nil

(100%)

(1,409)

(53.41%)

[7]

 

9. Risk

 

Major risks include:

 

Competitor risk – Competition covers both the pretreatment market as a whole and individual player’s technologies and products.

 

Commercialisation risk – There is a risk that LER may not successfully commercialise its Glycerol Pretreatment Process at all or within the term of the relevant patents.

 

Revenue and Income risk – LER is at an early stage with its Glycell pretreatment process and does not yet have any products or technologies that generate revenues. LER’s ability to generate revenues in the future will be subject to a number of factors, the outcomes and timing of which are difficult to predict. It is likely that LER will continue to incur losses for the year ending June 30th 2017 and is unlikely to pay a dividend for a number of years.

 

Additional financing risk – LER doesn’t anticipate that its existing cash reserves and Government grants, will be sufficient for LER to meet its current capital requirements. Funds will have to be raised from the market and there is no guarantee that such fund raising will be successful.

 

Dependence on Management team – LER’s management team is led by its Managing Director and Chief Operating Officer. Much of its scientific research is contracted out to outside parties that have the appropriate expertise for the task. LER’s management capability may be adversely affected if either the MD or the COO were not available and could not be replaced by appropriately qualified personnel.[8]

 

References

  1. ^ Annual Report 2016, P 5, http://www.leafresources.com.au/UserFiles/files/Documents/LER-2016-Annual-Report.pdf
  2. ^ Annual Report 2016, P8,http://www.leafresources.com.au/UserFiles/files/Documents/LER-2016-Annual-Report.pdf
  3. ^ http://www.ibisworld.com.au/industry/default.aspx?indid=1901
  4. ^ Incorporated in 2002, ZeaChem is headquartered in Lakewood, Colorado, operates a research and development laboratory facility in Menlo Park, California, and a 250,000 gallon per year demonstration biorefinery in Boardman, Oregon
  5. ^ http:///leafresources.com.au/board-of-directors/
  6. ^ http://www.leafresources.com.au/executive-team/
  7. ^ Annual Report 2017, P 39, http://leafresources.listedcompany.com/misc/ar2017.pdf
  8. ^ Annual Report 2016, http://www.leafresources.com.au/UserFiles/files/Documents/LER-2016-Annual-Report.pdf